Spanish Bad Loans Hit Fresh Record High Again

Tyler Durden's picture

In what is becoming a monthly parabolic charting tradition, it is again time to update the Spanish bad loan total: in September, Spanish loans that fell into arrears increased by €3.5 billion from August, reaching €182.2 billion in September. This is 10.71% of the total Spanish bank loans of €1.7 trillion, and an increase from 10.5% in the prior month. At the same time, new bank loans expanded 0.2% in September and dropped 4.9% from a year ago, the Bank of Spain said. Deposits rose 1.4% from the previous month and declined 7.3% from a year earlier.  Putting the bad loan number in context, it is nearly double the €100 billion that the Spanish banks will receive as part of the bank bailout plan disclosed in July, and well above the "only" €40 billion that Spain promises it will need to actually fund bank capital shortfalls. Putting it into further context, as a percentage of GDP, it would be the equivalent of $2.8 trillion in US loans going bad. Naturally, just like with any "forecast" involving Greece, the final bailout (of both Spain's banks, and the sovereign) will be orders of magnitude higher, but for now everyone is forgiven to stick their head in the sand for at least a few more days/weeks.

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GetZeeGold's picture



My Spanish paper is suddenly no good?

Middle_Finger_Market's picture

You've been hoarding shit since day 1. 

JPM Hater001's picture

The soft fluffy kind with cute bears shitting in the woods is rising...

Every other kind not so much.

Haus-Targaryen's picture

Am I the only one, when I see bad news out of Europe ... my first reaction is "Sweet." 

Don Diego's picture

they do, but authorities have the serial numbers and addresses of the owners so guns can be collected for "safekeeping" when the peasants become restless.

BlueCollaredOne's picture

I've become so desensitized to bad news from Europe that I no longer feel emotion to it.  It has become my status quo.

However, anytime I read some "good news" is when a true reaction occurs.  That's when I say "How the fuck did they spin that?" or "Man, they are some epic can kickers."

Middle_Finger_Market's picture

Sweet in the sense that the inevitable outcome is a complete disintergartion of the financial and living systems we think we know...then no, there are others who would like to see a complete overhaul and change of humanities direction. 

Haus-Targaryen's picture

I'd rather make a few easy bucks sitting on my butt, drinking my Bailey's coffee, starting at a few computer screens.  Bad news out of Europe = predictability.  


Also, Europe deserves every oz. of this.  Trying to castrate Germany and handing money out like Halloween Candy.  Please.  The quicker the continent goes belly up the better.  

LawsofPhysics's picture

and what do the current CDS contracts look like?  What are interest rates looking like?  Something does not add up, but I am sure that the Euro is just fine, much like the dollar.  < sarc off >

GetZeeGold's picture



They're basically worthless......can't get anyone to declare a default.


LawsofPhysics's picture

correct, which means the underlying currency/currencies will collapse when trade with these banks/countries collapses (why trade with someone who offers you nothing real in exchange).  Turns out counterparty risk is very real after all, who could have guessed it?   Bloody sheep.

Never One Roach's picture

Maybe the Aliens will come and save the Spaniards too?

disabledvet's picture

The center cannot hold. This is coming to the USA...I say imminently (as in starting next Monday)...and "thank God we got a war in the Middle East" out of the whole deal????? Never has the difference between politics and war seem so stark to me.

LawsofPhysics's picture

Having been the third generation to serve, you know as well as I that countries and people are always at war.  Money is an illusion, power and control of resources and people has always been what it is all about.  My father (test pilot in the 60's) and grandfather (artillery in the pacific) never spoke of their experiences, although for different reasons.  Today's politicians are different from the ones of old.  Admittedly, both are puppets for the real power brokers, but at least 30-40 years ago many of them did indeed have harsh real-world experiences.

Today's politicians are ivy-league pampered experts in semantics in order to facilitate speaking out right lies without seeing them as such.  85 billion in direct monetization every month will mean the end of the dollar, period.

Counterparty risk is very real, and the reality is that life, Nature, and the laws of physics make no promises regarding anyone's survival.  We can fix the underlying moral hazard and issue of real consequences for fraud and theft or Nature will through humanity's own instinct to survive.

History shows us how this will all turn out.

forwardho's picture

Laws,  You are there. Truth IS. The manner  that we act according to this truth, gives us a sense of control over our destiny. The first choice is to see that which is plainly "true"


slaughterer's picture

Thanks Tyler,  It is worse than we could have imagined.  But OMT should soak it all up after elections give Rajoy the keys to the State jetliner for football parties.  

desirdavenir's picture

I have calculated 1.8 trillions in US$ equivalent wrt GDP...

yogibear's picture

Where are the Germans, Bernanke and the ECB to buy everything up and save the day? Bernanke and the almighty fed indicated they will buy up all TBTF failiures and Ponzis with their printed dollars.

slaughterer's picture

Bernanke is giving a speech today.  Why do you think PMs are up as well?

timbo_em's picture

Please do not worry. Oliver Wyman will find a way to make those €182.2 billion look less scary.

Edit: When bad loans first rose dramatically in the mid 1980s, Spain joined the EU, no internal reforms. When bad loans went up the second time in 1994, the upcoming introduction of the Euro saved Spain, no internal reforms. Who will save them this time?

DollarDive's picture

Here's a funny story in the NYPost on DTCC and the saga of the disappearing bearer bonds:


I know Tyler had run a story on it a week or so ago.

SheepDog-One's picture

This dying corpse sure does have lots of last gasps in it.

LongSoupLine's picture

This is obviously bullish as futures have ramped even higher.


fucking horseshit.

SheepDog-One's picture

Must....pump....Black Friday....must give....retail consumer monkey.....happy feelings...

plaspotje's picture

and these numbers are government and bankers numbers so the bad loans are higher than that.

forwardho's picture

10.71% decrease in the value of the top rated reserves, for which untold trillions of derivatives  have been based on. The house of cards upon which the world economy has been built on is levitating. The first of many "Kings" who are now seen to be very, very, naked.

Pretorian's picture

I expected more and market as well. This is good news.

Shevva's picture

Your all missing the big indicator over the Euro, it's when Starbucks in Europe refuses to take the Euro.

What does Europe mean other than a land mass or what a load of unelected tw@ts in Brussels say it is?

falak pema's picture

Nope; what Merkel and Draghi say it is; the combination of international Banksta Oligarchy spokesman and German Might. The rest are harem eunuchs. 

falak pema's picture

old lamps for new; old lamps for new; old debts for new money...that ECB is a sucker for old debts. "Just keep unloading your toxic debts Rajoy...ECB buys it all!"

Tombstone's picture

I wonder if more debt will lead to Lehman X's 100?

Never One Roach's picture

Why pay back the loans at all? This is the New paradigm......just walk away and pass the losses onto others is all the Rage.

Canucklehead's picture

If you want a taste of how this all might play out, read: The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance.

There is a section in Part 1 - Panic, where in the banana republic days discussion revolved around Honduras bonds, and how to extract value.  The Google Books Link below will generate 4 results.  Click on the Previous Tab and start reading.

Dareconomics's picture

Spain is becoming jealous that Greece has been getting all of the media attention lately, so it strikes back today with news that its banks set another record in the bad loan department.

Spanish banks reported 10.71% of their €1.7tr loans are nonperforming. Reuters states:

The new figures won't affect the euro zone aid, aimed at cleaning up the toxic real estate assets from the lenders' balance sheets, but reflect moves by the banks to be more realistic about the extent of their bad loans.

The implication of banks being "more realistic" regarding bad loans is that they are still not being honest enough. Spain's banks are insolvent and being kept alive by huge amounts of credit from the ECB.

As usual, the situation is being sugar-coated by bureaucrats, politicians and bankers. Here are the numbers.

The Spanish banks own €95bn in Portuguese, Greek and Irish debt, and you can kiss the all but the Irish debt goodbye for now. This number is dwarfed by the bank's real estate loans and residential mortgages.

They currently have €385bn in real estate loans, and a property bubble just burst. In addition to these loans, they also have €630bn in residential mortgage loans on their books. As the economy worsens and property values drop,  more real estate loans and mortgages will go bad.

If we know anything about a banking crisis, it is that we do not learn how bad it is until the banks fail and the regulators step in to assess the damage.

For a back of the envelope calculation, let's say that the Spanish bad loan number reaches 25%, which is reasonable considering conservative economic forecasts telling us that Spain's economy will continue to shrink into 2014. One-quarter of €1.7tr is €425bn.

This number wipes out the rest of the vaunted ESM, and we have not even bailed out the Spain's government. Frankly, I believe that the northern tier will come to its sense by then and cut the periphery off.

The lies of the bureaucrats, politicians and bankers will be uncovered sooner or later. In the meantime taxpayer money courtesy of the ECB will keep the whole thing from running off the rails, but no one knows for how long.